Stabilising rents around the world

In our first blog, we showed how private renters in England have faced eyewatering and unaffordable rent increases in recent years. To prevent renters from being forced out of their homes, Shelter and the Renters Reform Coalition want to see annual rent increases limited to a rise in line with either inflation or wages, whichever is lower.

It doesn't have to be this way…

England is unusual internationally in having a large private rented sector with very few rules about how much rent can go up for sitting tenants.

Many countries have restrictions on rent increases within the term of a tenancy, sometimes known as rent stabilisation measures. Rather than experiencing sudden, unexpected jumps in rent, tenants and landlords know exactly how much the cost of rent could be increased. Both can budget accordingly – and tenants don't face the agonising choice between finding the money to cover a huge increase or being served an eviction notice. A choice too often experienced by renters in England.

The international evidence

Places where a large proportion of people rent privately often have rent stabilisation measures in place, such as France, Germany, Ireland, Belgium and Switzerland. Experiences in these countries show that, contrary to some claims, rent stabilisation does not cause the private rented sector to shrink (with the associated unintended consequences that might have for renters).

In Germany, rent stabilisation has been a standard part of private renting for decades. Rents can be raised only once every 15 months and by a maximum of 20% in a three-year period. A very high proportion of households in Germany rent their homes privately: 52% compared to 19% in England. German tenants are protected during periods of rapidly rising rents, for example after the 2008 global financial crisis. Between 2010 and 2016, newly advertised rents rose by 23% in Germany but overall rents only increased by 10% due to the stability of sitting tenants.

Having a stable place to live isn't just a 'nice to have' for renters: it's recognised by economists as having important social and economic benefits. Studies from the United States show that in jurisdictions with rent stabilisation policies, low-income renters face fewer forced moves. Rent stabilisation contributes to community continuity and workers can stay in cities that otherwise would have become unaffordable to them. In turn, higher housing stability is better for mental and physical health and children's educational attainment.

What can we learn from other countries on how to stabilise rents in England?

Alongside the Renters' Reform Coalition, Shelter is calling for radical reforms to make private renting more secure. As well as indefinite tenancies and an end to 'no-fault' evictions, we want to see rent increases restricted to once a year. Rent increases should also be limited to a rise in line with either inflation or wages, whichever is lower.

Previous Shelter research found that moderate regulations like this are unlikely to cause a sudden mass exodus of landlords, which could have unintended consequences for renters. And international comparison suggests rent stabilisation would not push landlords into annual rent increases they might not otherwise make. In Belgium, where rent increases are allowed annually in line with a cost of living index, more than three-quarters of landlords chose not to raise their rents in 2021-22 despite rapidly rising market rents.

One of the most important lessons to be learnt from rent stabilisation in other countries is that good data and a consistent policy are key to making it work. From September 2022 to March 2023, Scotland had a cap on the amount that landlords could raise rents. Increases were initially limited to 0% and then, from April 2023, to 3%. The end of the temporary limit has seen some tenants suddenly face large increases – although during the policy’s term overall rents in Scotland have not been rising faster than elsewhere in the UK. Temporary measures like this with cliff edge dates and without an external index measure lead to uncertainty. The government must make clear that any rent stabilisation policy introduced is here to stay, so that renters and landlords have certainty.

It also needs to be very clear precisely what the limits are to rent increases. Previous attempts in Scotland to introduce rent caps in certain areas called 'rent pressure zones' failed because the data needed to trigger the restrictions simply wasn't available. In Belgium, the government publishes the cost of living index by which rents can be raised. This means it's very clear what's permitted, empowering renters to enforce their rights.

Take action

Renters in England deserve the same stability and security enjoyed by tenants in other parts of the world.

The next government must introduce sensible limits to in-tenancy rent increases and stop people being priced out of their homes.

Tell your parliamentary candidate that if they want your vote, they must prioritise ending the housing emergency - by tackling runaway rents and building a new generation of social homes.